Loan from parents treated with Cap Gains Tax?

J

Jenna91

Guest
Hi all,
Hope someone can help with this. We are in the process of putting an offer in on a house which will be financed by 100K savings, 100k mortgage and 150K from the sale of our current home (no mortgage). My parents have kindly offered us the loan (stictly a loan!) of the 150K until we sell our own house which we don't even have on the market yet. Would this loan have to be treated with CGT even though we have every intention of paying it back ? Could a legal document be drawn up instead that would satisfy revenue ? Completely clueless on how to proceed or would the best thing be to contact revenue and ask them ? Any imput positive or negative would be appreciated, thanks.
 
As far as i am aware there is no tax liability here for you.

Have a read of the web site below. As of 2011, a son or daughter (group A on the site) you can receive a maximum of 250K from your parent without any tax liability.

I don't think the fact that you plan to pay it back matters.

Your solicitor may look for a letter from your parent stating that they do not want any interest in the property. I had to provide a letter saying this when i received a gift of 28K but it was more mandated from the bank but my solicitor did request a copy of the letter as well.
 
If you can show that it's a loan then you should be alright from a CAT point of view, although strictly speaking if it's an interest free loan, the amount of interest they're not charging you while waiting for you to pay it back is actually a gift, if that makes any sense!
 
If you're going to pay it back than it's not a gift.

What is more worrying is that you're putting in an offer on a house without selling, or even putting on the market your own home. Where are you getting the value of 150K from. You really ought to test the market before buying. Normally with your figures I wouldn't say that but the market is quite crazy at the moment.

You've a great savings record, plus zero mortgage on your home. And the next mortgage is fairly low.
 
You must log in or register to reply here.
Back
Top